Judge mulls Johnson & Johnson bid to block vote changes in ex-talc supplier bankruptcy

September 20, 202111:23 PM UTCUpdated ago

A bottle of Johnson's Baby Powder is seen in a photo illustration taken in New York — A bottle of Johnson and Johnson Baby Powder is seen in a photo illustration taken in New York, February 24, 2016. Consumers expressed concern on social media about a talc-based baby powder made by Johnson & Johnson on Wednesday after a Missouri jury ordered the company to pay $72 million in damages to the family of a woman who said her death from cancer was linked to use of the product.

Law Firms

(Reuters) - Johnson & Johnson on Monday attempted to discredit efforts by lawyers representing personal injury claimants to change their votes on the restructuring plan of J&J's former talc supplier, Imerys Talc America Inc.

Allowing the claimants to change their votes would "make a mockery" of the bankruptcy plan voting process, J&J attorney Ronit Berkovich of Weil, Gotshal & Manges said during Monday's virtual hearing before U.S. Bankruptcy Judge Laurie Selber Silverstein.

The dispute stems from two law firms that moved to swap their clients’ votes against the Imerys reorganization plan to votes in favor of the plan, which would provide critical support for the proposal. J&J, which has opposed the plan, has urged Silverstein to prevent them from changing the votes or to toss them altogether.

Imerys, represented by Latham & Watkins, filed for bankruptcy in February 2019 to deal with about 15,000 lawsuits alleging its products caused ovarian cancer and asbestos-related mesothelioma. The plan, if approved by the bankruptcy court, would set up a trust to compensate personal injury claimants. J&J, which has also faced extensive litigation over its talc products and has denied wrongdoing, argues that Imerys is trying to make it easier for cancer victims to sue J&J instead.

The pharmaceutical giant asked the judge to reject motions to change more than 15,000 plan votes submitted by one law firm, Bevan & Associates, and several hundred more from a second firm, Williams Hart Boundas Easterby. J&J also filed a separate motion to disqualify those votes altogether. More than 80,000 votes were cast overall.

Silverstein did not rule but appeared reluctant to “disenfranchise” votes submitted by attorney Thomas Bevan on behalf of his clients.

“(Bevan) should vote in the way that he believes is in his best interest. I don’t really get to second guess that, do I?” she said.

J&J argues that the votes were changed after the voting deadline and that there’s no reason for Bevan’s clients to support the plan because very few of them will be eligible for recoveries from the trust. Bevan said at the hearing that he was changing his clients’ votes because of a misunderstanding of how a vote on the Imerys plan could affect his clients’ rights in another talc-related bankruptcy, that of Cyprus Mines Corp.

But even with the misunderstanding clarified, there’s still no good reason for Bevan’s clients to support the plan, Berkovich said.

“It’s as if Mr. Bevan is voting to accept because he believes two plus two equals five, or the earth is flat,” she said.

When asked if any of his clients instructed him to vote in favor of the plan, Bevan said he does “what’s best for my clients as a whole.”

Bevan also testified that neither his clients nor his firm were offered anything in exchange for switching their votes.

Imerys, once the U.S.-based arm of French group Imerys SA, was sold to Magris Resources Canada Inc for $223 million in 2020. Those proceeds will go to a trust that, under the company’s proposed plan, will pay personal injury claims.

The case is In re Imerys Talc America Inc., U.S. Bankruptcy Court, District of Delaware, No. 19-10289.

For Imerys: Jeffrey Bjork, Kimberly Posin, Helena Tseregounis and Richard Levy of Latham & Watkins; and Mark Collins, Michael Merchant, Amanda Steele and Brett Haywood of Richards, Layton & Finger

For Johnson & Johnson: Diane Sullivan, Gary Holtzer, Ronit Berkovich and Theodore Tsekerides of Weil Gotshal & Manges, and Patrick Jackson of Faegre Drinker Biddle & Reath

For the tort committee: Natalie Ramsey, Mark Fink and Michael Enright of Robinson & Cole; Rachel Strickland, Jeffrey Korn, Dan Forman and Stuart Lombardi of Willkie Farr & Gallagher; and Kami Quinn of Gilbert

Johnson & Johnson gears up for showdown over reorg votes with ex-talc supplier

U.S. judge declines to stop J&J from splitting talc liabilities from main business

EXCLUSIVE – J&J exploring putting talc liabilities into bankruptcy